Answer

The Deficit Reduction Act of 2005 mandated a quality adjustment in Medicare Diagnosis Related Group (DRG) payments for certain hospital-acquired conditions (HAC) when the condition was not present on admission (POA) to the hospital. In other words, hospitals would no longer receive additional payments for the care required as a result of certain accidents and medical errors that occurred during a hospital stay. CMS entitled the program “Hospital-Acquired Conditions and Present on Admission Indicator Reporting” and it views this initiative as an incentive for hospitals to improve patient care.

As a back-drop to this initiative, CMS recently published annual HAC rates and estimates of cost savings and deaths averted from 2010 to 2015. The analysis indicated that hospitalized patients experienced > 3 million fewer HACs over the 5 year span (2011–2015) than if the HAC rate had remained at the 2010 level (representing a 21% decline). They estimate that approximately 125,000 fewer patients died due to hospital-acquired conditions and more than $28 billion in health care costs were saved from 2010 through 2015.

HAC/POA data track the development of nosocomial infections and other adverse effects or iatrogenic complications during the inpatient hospital stay. POA Indicator codes must be assigned to all inpatient principal and secondary diagnosis codes, and most external cause of injury codes (ICD-9-CM “E codes” and ICD-10-CM “W, X, Y codes”). Hospitals began mandatory reporting of POA codes for Medicare inpatient claims on October 1, 2007.

Effective October 1, 2008, CMS reformed payment of inpatient facility services for conditions not identified as POA. Based on these payment reforms, inpatient hospital stays with certain HAC are reimbursed as though the conditions were not present.

Beginning in Fiscal Year (FY) 2015, a HAC Reduction Program began to impose financial penalties on hospitals that performed poorly with regard to certain HACs. By statute, hospital payments are reduced by 1 percent for hospitals that rank among the lowest-performing 25 percent with regard to HACs. HAC reductions are applied after adjustments for the Value-Based Purchasing and the Readmission Reduction Programs.

In FY 2017, 769 of 3,203 hospitals ranked in the worst performing quartile and were subject to payment reduction, as compared to 751 hospitals out of 3,211 hospitals in FY 2016.

Across FY 2015, FY 2016, and FY 2017, the average performance across eligible hospitals improved for the mean Catheter-Associated Urinary Tract Infection (CAUTI) standardized infection ratio (SIR). The mean SIR decreased from 1.12 in FY 2015 and 1.17 in FY 2016 to 0.91 in FY 2017.

Of note, CMS reports on the following HAC Reduction Program scores as of FY 2018:

Answer

The Deficit Reduction Act of 2005 mandated a quality adjustment in Medicare Diagnosis Related Group (DRG) payments for certain hospital-acquired conditions (HAC) when the condition was not present on admission (POA) to the hospital. In other words, hospitals would no longer receive additional payments for the care required as a result of certain accidents and medical errors that occurred during a hospital stay. CMS entitled the program “Hospital-Acquired Conditions and Present on Admission Indicator Reporting” and it views this initiative as an incentive for hospitals to improve patient care.

As a back-drop to this initiative, CMS recently published annual HAC rates and estimates of cost savings and deaths averted from 2010 to 2015. The analysis indicated that hospitalized patients experienced > 3 million fewer HACs over the 5 year span (2011–2015) than if the HAC rate had remained at the 2010 level (representing a 21% decline). They estimate that approximately 125,000 fewer patients died due to hospital-acquired conditions and more than $28 billion in health care costs were saved from 2010 through 2015.

HAC/POA data track the development of nosocomial infections and other adverse effects or iatrogenic complications during the inpatient hospital stay. POA Indicator codes must be assigned to all inpatient principal and secondary diagnosis codes, and most external cause of injury codes (ICD-9-CM “E codes” and ICD-10-CM “W, X, Y codes”). Hospitals began mandatory reporting of POA codes for Medicare inpatient claims on October 1, 2007.

Effective October 1, 2008, CMS reformed payment of inpatient facility services for conditions not identified as POA. Based on these payment reforms, inpatient hospital stays with certain HAC are reimbursed as though the conditions were not present.

Beginning in Fiscal Year (FY) 2015, a HAC Reduction Program began to impose financial penalties on hospitals that performed poorly with regard to certain HACs. By statute, hospital payments are reduced by 1 percent for hospitals that rank among the lowest-performing 25 percent with regard to HACs. HAC reductions are applied after adjustments for the Value-Based Purchasing and the Readmission Reduction Programs.

In FY 2017, 769 of 3,203 hospitals ranked in the worst performing quartile and were subject to payment reduction, as compared to 751 hospitals out of 3,211 hospitals in FY 2016.

Across FY 2015, FY 2016, and FY 2017, the average performance across eligible hospitals improved for the mean Catheter-Associated Urinary Tract Infection (CAUTI) standardized infection ratio (SIR). The mean SIR decreased from 1.12 in FY 2015 and 1.17 in FY 2016 to 0.91 in FY 2017.

Of note, CMS reports on the following HAC Reduction Program scores as of FY 2018:

Answer

On June 1, 2011, CMS released the final rule wherein the Patient Protection and Affordable Care Act prohibits Medicaid payments for two categories of Provider Preventable Conditions (PPC). The rule prohibits Medicaid payments under section 1903 of the Social Security Act expended for medical assistance related to PPC, provided that the regulation does not result in loss of access to care or services for Medicaid beneficiaries. Additionally, the rule applies to individuals dually eligible for both Medicare and Medicaid programs. PPC is an umbrella term defined by two categories: 1) Health Care-Acquired Conditions (HCAC) and 2) Other Provider-Preventable Conditions (OPPC). Currently, the minimum Medicaid HCAC list correlates to the HAC Medicare outline established for inpatient hospital settings. OPPC can occur in an outpatient hospital, nursing facility, ambulatory care setting, and other healthcare settings. The Affordable Care Act provides individual states broad flexibility in defining their HCAC and OPPC policies and programs. In August 2012, CMS published the Inpatient Prospective Payment System (IPPS) Fiscal Year (FY) 2013 Final Rule. The Final Rule discussed the addition of two new HACs, one of which was a new Surgical Site Infection Following Cardiac Implantable Electronic Device (CIED) and the other was Iatrogenic Pneumothorax with Venous Catheterization. Two additional ICD-9-CM codes were added to the Vascular Catheter-Associated Infection HAC Category. For the FY 2014 Final Rule, no additional HACs were added.

Of note, the Recalibrated PSI 90 Composite is a weighted average of the risk- and reliability-adjusted versions (or smoothed versions) of these 10 PSIs. In 2018, CMS will use 15 months of data, instead of 24 months, to calculate a hospital’s Recalibrated PSI 90 composite performance.

In FY 2018, CMS transitioned to a new scoring methodology (Winsorized z-score). It is a continuous scoring method that relies on the actual measured value, ranking hospitals with the best performance to the worst performance, and directly comparing each hospital’s measured result with the mean score (in standard deviations). Because of this change in reporting, a hospital cannot compare scores from FY 2018 with previous years’ scores. Changes in this calculation method does not affect how CMS determines domain scores, Total HAC scores, or the worst-performing quartile.

The total HAC score for each hospital is calculated using two defined domains: Domain 1 (weighted at 15% in FY 2017) and Domain 2 (weighted at 85% in FY 2017). Domain 1 is the PSI 90 Composite. Domain 2 is composed of CLABSI, CAUTI, SSI, MRSA bacteremia, and CDI measure scores. If a hospital only has a score for one of the domains, then a weight of 100 percent will be applied to the domain for which the hospital has a score.

For more information on the scoring methodology used for FY 2018 HAC Reduction Program, please see the Hospital-Specific Report (HSR) User Guide document located at:

In addition to HCAC, Medicaid established a second category of non-payment policies for provider preventable conditions (PPC), applicable to any health care setting:

Category 2 Other Provider Preventable Conditions (OPPC)

Wrong Surgical or other invasive procedure performed on a patient

Surgical or other invasive procedure performed on the wrong body part

Surgical or other invasive procedure performed on the wrong patient

OPPCs identified in the state's plan and according to the requirements of the final regulation

Answer

On June 1, 2011, CMS released the final rule wherein the Patient Protection and Affordable Care Act prohibits Medicaid payments for two categories of Provider Preventable Conditions (PPC). The rule prohibits Medicaid payments under section 1903 of the Social Security Act expended for medical assistance related to PPC, provided that the regulation does not result in loss of access to care or services for Medicaid beneficiaries. Additionally, the rule applies to individuals dually eligible for both Medicare and Medicaid programs. PPC is an umbrella term defined by two categories: 1) Health Care-Acquired Conditions (HCAC) and 2) Other Provider-Preventable Conditions (OPPC). Currently, the minimum Medicaid HCAC list correlates to the HAC Medicare outline established for inpatient hospital settings. OPPC can occur in an outpatient hospital, nursing facility, ambulatory care setting, and other healthcare settings. The Affordable Care Act provides individual states broad flexibility in defining their HCAC and OPPC policies and programs. In August 2012, CMS published the Inpatient Prospective Payment System (IPPS) Fiscal Year (FY) 2013 Final Rule. The Final Rule discussed the addition of two new HACs, one of which was a new Surgical Site Infection Following Cardiac Implantable Electronic Device (CIED) and the other was Iatrogenic Pneumothorax with Venous Catheterization. Two additional ICD-9-CM codes were added to the Vascular Catheter-Associated Infection HAC Category. For the FY 2014 Final Rule, no additional HACs were added.

Of note, the Recalibrated PSI 90 Composite is a weighted average of the risk- and reliability-adjusted versions (or smoothed versions) of these 10 PSIs. In 2018, CMS will use 15 months of data, instead of 24 months, to calculate a hospital’s Recalibrated PSI 90 composite performance.

In FY 2018, CMS transitioned to a new scoring methodology (Winsorized z-score). It is a continuous scoring method that relies on the actual measured value, ranking hospitals with the best performance to the worst performance, and directly comparing each hospital’s measured result with the mean score (in standard deviations). Because of this change in reporting, a hospital cannot compare scores from FY 2018 with previous years’ scores. Changes in this calculation method does not affect how CMS determines domain scores, Total HAC scores, or the worst-performing quartile.

The total HAC score for each hospital is calculated using two defined domains: Domain 1 (weighted at 15% in FY 2017) and Domain 2 (weighted at 85% in FY 2017). Domain 1 is the PSI 90 Composite. Domain 2 is composed of CLABSI, CAUTI, SSI, MRSA bacteremia, and CDI measure scores. If a hospital only has a score for one of the domains, then a weight of 100 percent will be applied to the domain for which the hospital has a score.

For more information on the scoring methodology used for FY 2018 HAC Reduction Program, please see the Hospital-Specific Report (HSR) User Guide document located at:

Answer

As discussed, the initial HAC program (for Medicare and Medicaid) includes the list of 14 conditions that, if acquired during a hospital stay, would lower the diagnosis-related group (DRG) payment as if the condition were not present. Without the payment reduction program, these conditions would generally increase the DRG payment. That program continues to this day, but has had very little effect on payment reductions overall.

The HAC penalty, on the other hand, and has had a substantial effect on payment reduction. It comprises the 1% penalty for the (roughly) lowest performing quartile.

Answer

As discussed, the initial HAC program (for Medicare and Medicaid) includes the list of 14 conditions that, if acquired during a hospital stay, would lower the diagnosis-related group (DRG) payment as if the condition were not present. Without the payment reduction program, these conditions would generally increase the DRG payment. That program continues to this day, but has had very little effect on payment reductions overall.

The HAC penalty, on the other hand, and has had a substantial effect on payment reduction. It comprises the 1% penalty for the (roughly) lowest performing quartile.

Answer

Emergency physician documentation is often crucial in supporting whether or not a condition was present at the point of hospital admission.If documentation is insufficient to determine whether a condition was POA, CMS will deny reimbursement as a presumed "hospital-acquired" condition.

POA is defined as present at the time the order for inpatient admission occurs. Thus, conditions occurring during an emergency department visit are considered POA. Medical record documentation from any qualified provider involved in the care and treatment of the patient may be used to support the determination of whether a condition was present on admission.

The 2011 Affordable Care Act stipulates that no reduction in payment for a provider preventable condition will be imposed on a provider when the condition defined as a PPC for a particular patient existed prior to the initiation of treatment by that provider.

Emergency physicians must thoroughly evaluate and document the patient's clinical conditions. This will include documentation of all relevant diagnoses and comorbidities:

While "rule out, suspected and probable" diagnoses and conditions cannot be coded for the professional component, these differential diagnoses are valuable for the medical record. Your HPI, ROS, PMH, exam and clinical impression documentation are more important than ever to support reimbursement.

Answer

Emergency physician documentation is often crucial in supporting whether or not a condition was present at the point of hospital admission.If documentation is insufficient to determine whether a condition was POA, CMS will deny reimbursement as a presumed "hospital-acquired" condition.

POA is defined as present at the time the order for inpatient admission occurs. Thus, conditions occurring during an emergency department visit are considered POA. Medical record documentation from any qualified provider involved in the care and treatment of the patient may be used to support the determination of whether a condition was present on admission.

The 2011 Affordable Care Act stipulates that no reduction in payment for a provider preventable condition will be imposed on a provider when the condition defined as a PPC for a particular patient existed prior to the initiation of treatment by that provider.

Emergency physicians must thoroughly evaluate and document the patient's clinical conditions. This will include documentation of all relevant diagnoses and comorbidities:

While "rule out, suspected and probable" diagnoses and conditions cannot be coded for the professional component, these differential diagnoses are valuable for the medical record. Your HPI, ROS, PMH, exam and clinical impression documentation are more important than ever to support reimbursement.

Answer

There are currently some exclusions for inpatient Medicare and Medicaid patients in the following settings:

Critical Access Hospitals

Long Term Care Hospitals

Maryland Waiver Hospitals*

Cancer Hospitals

Children's Inpatient Facilities

Religious Non-Medical Health Care Institutions

Inpatient Psychiatric Hospitals

Inpatient Rehabilitation Facilities

Veterans Administration/Department of Defense Hospitals

*Maryland Waiver Hospitals must report the POA indicator on all claims.

It is advisable to periodically check with your state Medicaid administrator to determine current provider-preventable conditions and reporting requirements, as well as the appeals process for improperly identified PPC.

Third party payers beyond Medicare and Medicaid are closely monitoring the realized savings potential via nonpayment for preventable conditions. In summary, documentation of all relevant diagnoses and comorbidities for any patient, irrespective of disposition or payer, is a best clinical practice.

Answer

There are currently some exclusions for inpatient Medicare and Medicaid patients in the following settings:

Critical Access Hospitals

Long Term Care Hospitals

Maryland Waiver Hospitals*

Cancer Hospitals

Children's Inpatient Facilities

Religious Non-Medical Health Care Institutions

Inpatient Psychiatric Hospitals

Inpatient Rehabilitation Facilities

Veterans Administration/Department of Defense Hospitals

*Maryland Waiver Hospitals must report the POA indicator on all claims.

It is advisable to periodically check with your state Medicaid administrator to determine current provider-preventable conditions and reporting requirements, as well as the appeals process for improperly identified PPC.

Third party payers beyond Medicare and Medicaid are closely monitoring the realized savings potential via nonpayment for preventable conditions. In summary, documentation of all relevant diagnoses and comorbidities for any patient, irrespective of disposition or payer, is a best clinical practice.

The American College of Emergency Physicians (ACEP) has developed the Reimbursement & Coding FAQs and Pearls for informational purposes only. The FAQs and Pearls have been developed by sources knowledgeable in their fields, reviewed by a committee, and are intended to describe current coding practice. However, ACEP cannot guarantee that the information contained in the FAQs and Pearls is in every respect accurate, complete, or up to date. The FAQs and Pearls are provided "as is" without warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability and fitness for a particular purpose. Payment policies can vary from payer to payer. ACEP, its committee members, authors or editors assume no responsibility for, and expressly disclaim liability for, damages of any kind arising out of or relating to any use, non-use, interpretation of, or reliance on information contained or not contained in the FAQs and Pearls. In no event shall ACEP be liable for direct, indirect, special, incidental, or consequential damages arising out of the use of such information or material. Specific coding or payment related issues should be directed to the payer. For information about this FAQ/ Pearl, or to provide feedback, please contact David A. McKenzie, CAE, Reimbursement Director, ACEP at (972) 550-0911, Ext. 3233 or dmckenzie@acep.org.

The American College of Emergency Physicians (ACEP) has developed the Reimbursement & Coding FAQs and Pearls for informational purposes only. The FAQs and Pearls have been developed by sources knowledgeable in their fields, reviewed by a committee, and are intended to describe current coding practice. However, ACEP cannot guarantee that the information contained in the FAQs and Pearls is in every respect accurate, complete, or up to date. The FAQs and Pearls are provided "as is" without warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability and fitness for a particular purpose. Payment policies can vary from payer to payer. ACEP, its committee members, authors or editors assume no responsibility for, and expressly disclaim liability for, damages of any kind arising out of or relating to any use, non-use, interpretation of, or reliance on information contained or not contained in the FAQs and Pearls. In no event shall ACEP be liable for direct, indirect, special, incidental, or consequential damages arising out of the use of such information or material. Specific coding or payment related issues should be directed to the payer. For information about this FAQ/ Pearl, or to provide feedback, please contact David A. McKenzie, CAE, Reimbursement Director, ACEP at (972) 550-0911, Ext. 3233 or dmckenzie@acep.org.